Abstract

Despite of 21% contribution to GDP and nearly 44% share in country’s employment, agriculture is thought as a deprived sector in Pakistan’s economy. Statistics shows that agriculture sector has high credit (funds) absorption capacity. Still, it doesn’t have sufficient funds sources, despite of healthy contribution in country’s GDP. It is among mandatory factors, for all sectors of economy, to have a strong financial background for success. For the purpose, SBP is striving to get managed and enable sufficient flow of funds to agriculture sector, to produce high yield, resulting in farmer’s prosperity and hence the nation. A brief discussion has been made in this study about the demand and supply of credit and its sources available to farmers for financing small agriculture projects. A case study of district Dera Ismail Khan and Tank was made, by getting in contact with small farmer of the area. The analysis showed that the dependent variable i.e. the most attractive funds sources for agriculture sector, have very significant relationship between hurdles in the way of formal credit and behavior of bank officials. So, it is strongly highly recommended that government should take remedial measures like providing discounted interest rate, extending personal guarantee loans and broadening the out-reach circle by opening new branches of ZTBL in faraway areas of the country and encourage private sector to finance small and medium farmers agriculture sector.

Key words: Formal Credit, Financial Institutions, Small Farmers, Micro Financing, Agriculture Financing